Thank you, Madam Chair.
Madam Chair and members of the committee, my name is David Vaillancourt. I'm a partner at the law firm Affleck Greene McMurtry. My practice includes competition law and commercial litigation.
I believe that the abuse of dominance provisions of the Competition Act should be amended to allow private litigants to challenge anticompetitive conduct by monopolists. Right now, the commissioner of competition is the only one who can bring such abuse of dominance proceedings.
Abuse of dominance involves acts undertaken by a dominant firm against competitors in the market that substantially lessen or prevent competition. This generally means firms with more than 50% of market share. It’s about a monopolist using its position to squeeze out the competition and maintain or enhance its own market power.
When a victimized competitor has a problem with an anticompetitive monopolist, their only option is to make a complaint to the commissioner of competition. If the commissioner of competition does not decide to move forward with the matter, there is nothing the victimized competitor can do. The commissioner of competition has to be very selective with the abuse of dominance cases that he brings forward. Abuse of dominance tends to take a back seat to enforcement of the criminal provisions of the Competition Act, as well as merger review.
The commissioner of competition publishes annual statistics about the complaints he receives under the Competition Act’s various civilly reviewable provisions, which include abuse of dominance. I've previously emailed a copy of these statistics to members of the committee. The vast majority of complaints are about abuse of dominance. In the 2019-20 year, it was about 80% of complaints. The stats show that there were 467 complaints that year, and out of those complaints, only 11 investigations were commenced, which turned into three inquiries. The enforcement activities were also very limited. There was one case with a consent order, one case with an alternative case resolution, which is another form of settlement, and one case before the tribunal.
The underenforcement of the abuse of dominance provisions is not a new trend. Since 1986, there have only been 14 abuse of dominance proceedings brought before the Competition Tribunal. The commissioner of competition does not have the resources he needs to robustly police monopolists in Canada. This is causing injury not just to competitors but to competition generally, and to Canadian consumers.
It's clear that the current abuse of dominance regime is not working. Change is needed. Enforcement would be enhanced if there was a private right of action allowing victimized competitors to hold monopolists to account. Even the threat of private action would encourage change in behaviour by monopolists to avoid litigation. The cases don't need to get litigated all the way through to trial.
There are already several reviewable matters in the Competition Act that do allow a private right of action, with leave of the Competition Tribunal. The right to bring a private application for those sections is contained in section 103.1 of the act, which sets out the mechanics for seeking leave of the tribunal. This section could be amended to also add the right to seek leave to bring an abuse of dominance proceeding. Private litigants should also be allowed to make a claim for damages suffered as a result of anticompetitive conduct. Obtaining a go-forward remedy changing a monopolist’s conduct would be helpful, but economic loss caused by the anticompetitive conduct in the past should be compensated. Victimized competitors are more likely to incur the cost of following through with legal proceedings if there is some chance of monetary recovery.
The proposal I am making today is in line with the laws of our international peers. Both the United States and Europe permit private actions for abuse of dominance and monopolization. In fact, private action is the primary method of enforcement for monopolization in the United States, at a rate of about 10:1.
When a monopolist acts in an anticompetitive way, it hurts consumers in the long run by damaging competition. Less competition means higher prices and lower quality for consumers. Amending the Competition Act to allow private abuse of dominance proceedings would be procompetition and proconsumer, and would bring Canada in line with its international peers.